This Instrument Contains After-Acquired Property Provisions



             This Instrument Grants a Security Interest by a Utility

                         Texas-New Mexico Power Company
                   (Formerly Community Public Service Company)

                                       To

                      U.S. Bank Trust National Association,
                                     Trustee




                       Twenty-Sixth Supplemental Indenture

                                   Dated as of
                                 January 1, 1999

                              --------------------


                          Supplemental to and Modifying

                              Indenture of Mortgage
                                       and
                                  Deed of Trust
                          Dated as of November 1, 1944
                         (as supplemented and modified)






          This Instrument Contains After-Acquired Property Provisions.

                              ------------------

            This Instrument Grants a Security Interest by a Utility.

                              ------------------

<PAGE>






          This is a Security Agreement granting a Security Interest in
           Chattels including Chattels affixed to Realty as well as a
         Mortgage and Deed of Trust upon Real Estate and Other Property

         THIS TWENTY-SIXTH SUPPLEMENTAL INDENTURE,  dated as of January 1, 1999,
between  Texas-New  Mexico Power  Company  (formerly  Community  Public  Service
Company), as debtor, a Texas corporation (the "Company"),  whose mailing address
and address of its principal place of business is 4100 International Plaza, P.O.
Box 2943,  Fort Worth,  Texas 76113,  and U.S. Bank Trust National  Association,
formerly  First Trust  National  Association,  formerly First Trust of Illinois,
National  Association  (the "Trustee"),  (which is successor  trustee to Bank of
America Illinois,  a banking  corporation  organized under the laws of Illinois,
which was formerly  known,  at various  times,  as  Continental  Bank, a banking
corporation  organized under the laws of Illinois,  Continental  Bank,  National
Association, and Continental Illinois National Bank and Trust Company of Chicago
(the  "Predecessor  Trustee")),  as Trustee  and secured  party,  and having its
principal place of business and mailing address at 111 East Wacker Drive,  Suite
3000, Chicago, Illinois 60601:

         WHEREAS,  Community Public Service Company, a Delaware  corporation the
"Predecessor  Company"),  has  heretofore  executed  and  delivered  to the City
National  Bank and  Trust  Company  of  Chicago  (the  "Original  Trustee"),  an
Indenture  of  Mortgage  and Deed of Trust  dated as of  November  1,  1944 (the
"Original  Indenture,"  capitalized  terms used herein and not otherwise defined
herein shall have the same meaning as set forth in the Original  Indenture),  to
secure as provided  therein,  its bonds (in the  Original  Indenture  and herein
called the "Bonds") to be designated generally as its "First Mortgage Bonds" and
to be issued in one or more series as provided in the Original Indenture; and

         WHEREAS,  the Predecessor Company has heretofore executed and delivered
to the Original Trustee six indentures  supplemental to the Original  Indenture,
which  supplemental  indentures were dated as of March 1, 1947, January 1, 1949,
January 1, 1952, March 1, 1954, June 1, 1957 and June 1, 1961, respectively; and

         WHEREAS, simultaneously with the merger of the Predecessor Company into
the  Company,  the Company has  executed  and  delivered a Seventh  Supplemental
Indenture,  dated as of May 1, 1963, to Continental  Illinois  National Bank and
Trust Company of Chicago (into which on September 1, 1961, the Original  Trustee
was merged) as Predecessor Trustee; and

         WHEREAS,  the Company has  executed and  delivered  to the  Predecessor
Trustee  an Eighth  Supplemental  Indenture  dated as of July 1,  1963;  a Ninth
Supplemental  Indenture  dated  as of  August  1,  1965;  a  Tenth  Supplemental
Indenture dated as of May 1, 1966; an Eleventh  Supplemental  Indenture dated as
of October 1, 1969; a Twelfth Supplemental  Indenture dated as of May 1, 1971; a
Thirteenth  Supplemental  Indenture  dated  as of July  1,  1974;  a  Fourteenth
Supplemental  Indenture  dated as of March 1,  1975;  a  Fifteenth  Supplemental
Indenture  dated as of  September 1, 1976;  a Sixteenth  Supplemental  Indenture
dated as of November 1, 1981; a Seventeenth  Supplemental  Indenture dated as of
December 1, 1982; an Eighteenth  Supplemental Indenture dated as of September 1,
1983; a Nineteenth  Supplemental  Indenture dated as of May 1, 1985; a Twentieth
Supplemental  Indenture  dated as of July 1, 1987; a  Twenty-First  Supplemental
Indenture dated as of July 1, 1989; a Twenty-Second Supplemental Indenture dated
as of January  15,  1992;  a  Twenty-Third  Supplemental  Indenture  dated as of
September 15, 1993; a Twenty-Fourth  Supplemental Indenture dated as of November
3, 1995 and a  Twenty-Fifth  Supplemental  Indenture  dated as of September  10,
1996;

         WHEREAS, pursuant to the Original Indenture, as heretofore supplemented
and modified, there have been executed, authenticated and delivered $100,000,000
in original  principal  amount of First  Mortgage  Bonds of Series U, 9 1/4% due
2000, of which $100,000,000 in principal amount remain outstanding; and

         WHEREAS,  Continental  Illinois  National  Bank and  Trust  Company  of
Chicago changed its name to Continental Bank,  National  Association,  effective
December 12, 1988;  Continental Bank,  National  Association changed its name to
Continental Bank, effective June 29, 1994; and Continental Bank changed its name
to Bank of America Illinois effective September 1, 1994; and

         WHEREAS, on August 21, 1995 Bank of America Illinois and certain of its
affiliates  and First Bank  National  Association  (the parent of First Trust of
Illinois,  National  Association) and certain of its affiliates,  entered into a
Purchase and  Assumption  Agreement,  as  supplemented,  which  provided for the
purchase by the Trustee (or an affiliate) of  substantially  all of the Illinois
trust  and  agency  appointments  of  the  Predecessor  Trustee,  including  the
appointment under the Original Indenture, as supplemented and modified; and

         WHEREAS,  on  December  31,  1996,  First Trust of  Illinois,  National
Association  changed its name to First Trust National  Association  and on March
30, 1998, First Trust National  Association  changed its name to U.S. Bank Trust
National Association; and

         WHEREAS,  pursuant to Section 3-3 of the Illinois  Corporate  Fiduciary
Act (the "Act") and the No-Objection letter No. 95-1021 dated July 21, 1995 from
the  Illinois  Commissioner  of  Banks  and  Trust  Companies,  the  sale of the
Predecessor  Trustee's  corporate trust business to another corporate  fiduciary
will result in automatic  succession of the transferred accounts pursuant to the
provisions of the Act,  provided such  succession is not prohibited by the trust
instrument's provisions; and

         WHEREAS,  the  Trustee  is  qualified  and  eligible  to act as trustee
pursuant to the  Original  Indenture,  as  supplemented  and  modified,  and the
automatic succession is not prohibited by the Original Indenture; and

         WHEREAS,  to complete the  transfer  under the Act, the Trustee and the
Predecessor  Trustee  entered into an Instrument  of Transfer and  Assignment of
Certain Illinois  Appointments dated December 8, 1995 whereby the Trustee became
the trustee under the Original Indenture, as supplemented and modified; and

         WHEREAS, it is provided in the Original Indenture,  among other things,
that the  Company  and the Trustee  may,  and when so  required by the  Original
Indenture shall, enter into such indentures supplemental thereto as may or shall
by them be deemed  necessary or desirable and which shall thereafter form a part
thereof for the  purposes,  among others,  of (a)  subjecting to the lien of the
Original Indenture  additional  property acquired by the Company,  (b) providing
for the  creation  of any new  series of  Bonds,  designating  the  series to be
created and specifying the form and provisions of the Bonds of such series,  (c)
providing for a sinking, amortization,  improvement or other analogous funds for
the  benefit  of all or any of the  Bonds  of any  one or more  series,  of such
character  and of such  amount  and upon such terms and  conditions  as shall be
contained in such supplemental indenture; and (d) providing for modifications in
the Original Indenture, subject to certain conditions; and

         WHEREAS, the Company has executed and delivered to Chase Bank of Texas,
N.A. (the "Senior Debt  Trustee") an indenture  dated as of January 1, 1999 (the
"Senior Debt  Indenture")  to provide for the issuance  from time to time of its
debentures, notes, bonds or other evidences of indebtedness; and

         WHEREAS, the Company is entering into an Indenture  supplemental to the
Senior  Debt  Indenture  dated as of  January 1, 1999 (the  "First  Supplemental
Indenture")  with the Senior Debt Trustee for the purpose of issuing a series of
securities in an aggregate  principal  amount of  $$175,000,000 to be designated
the "6 1/4% Senior Notes Due 2009" (the "Senior Notes"); and

         WHEREAS,  the First  Supplemental  Indenture  requires,  as a condition
precedent  to the  issuance  and  effectiveness  of the Senior  Notes,  that the
Company issue a new series of First Mortgage Bonds to the Senior Debt Trustee in
an aggregate  principal  amount of up to $175,000,000 to secure the payment when
due of the Senior  Notes until the Release  Date (as such term is defined in the
First Supplemental Indenture); and

         WHEREAS,  the  agreements  of the  parties  to the  First  Supplemental
Indenture constitute consideration for the issuance of such First Mortgage Bonds
to the Senior Debt Trustee; and

         WHEREAS,  the  Company  desires  to,  and  as  required  by  the  First
Supplemental  Indenture  proposes to, create under the Original  Indenture a new
issue of First Mortgage Bonds, to be designated as First Mortgage Bonds,  Series
X (the  "Bonds of Series  X") to be due on January  15,  2009,  in an  aggregate
principal  amount of up to $175,000,000  and proposes to issue the same upon the
execution of this Twenty-Sixth Supplemental Indenture; and

         WHEREAS,  it is the intent of the Company  and the Senior Debt  Trustee
that any payment made in respect to the Company's  obligations  under the Senior
Notes  shall be deemed a  payment  in  respect  of the Bonds of Series X and all
payments which are applied to payment of the  outstanding  principal  balance of
the Senior  Notes shall be deemed to be payments  of  principal  of the Bonds of
Series X and the balance of such Bonds of Series X shall be reduced concurrently
with such payment; and

         WHEREAS,  it is the intent of the Company  and the Senior Debt  Trustee
that there be no  duplication in the  obligations  paid by the Company under the
Senior Notes and the Bonds of Series X, but the  payments,  if any, of principal
of or  interest  on the Bonds of Series X be  applied  to  payment of the Senior
Notes and that the benefits and security of the lien of the Original  Indenture,
as supplemented  and amended,  be extended to the Senior Notes until the Release
Date by means of the  issuance  and  delivery  of the  Bonds of  Series X to the
Senior Debt Trustee for the benefit of the holders of the Senior Notes; and

         WHEREAS,   the  Company  is  required  to  execute  this   Twenty-Sixth
Supplemental  Indenture  and  hereby  requests  the  Trustee  to  join  in  this
Twenty-Sixth  Supplemental  Indenture  for the  purpose,  among  others,  of (i)
creating and describing  the terms of the Bonds of Series X and (ii)  subjecting
to the lien of the Original Indenture, as supplemented and modified,  additional
property (the "Additional Property") acquired by the Company since the execution
and delivery of the  Twenty-Fifth  Supplemental  Indenture dated as of September
16, 1996 (the Original Indenture as heretofore  supplemented and modified and as
supplemented  and modified by this  Twenty-Sixth  Supplemental  Indenture  being
herein sometimes called the "Indenture"); and

         WHEREAS,  all acts and proceedings  required by law and by the Restated
Articles of Incorporation and By-Laws of the Company necessary to make the Bonds
of Series X, when  executed by the Company,  authenticated  and delivered by the
Trustee  and duly  issued,  the  valid,  binding  and legal  obligations  of the
Company,  and to constitute the Indenture a valid and binding  mortgage and deed
of trust for the security of all of the First Mortgage Bonds in accordance  with
its and their terms, have been done and taken; and the execution and delivery of
this  Twenty-Sixth  Supplemental  Indenture  have  been  in  all  respects  duly
authorized.

         NOW, THEREFORE, THIS TWENTY-SIXTH  SUPPLEMENTAL INDENTURE,  WITNESSETH,
that, in order to secure the payment of the principal of,  premium,  if any, and
interest on all Bonds at any time issued and outstanding under the Indenture, to
indirectly secure payment of the principal of, premium,  in any, and interest on
all Senior  Notes at any time  issued  and  outstanding  under the  Senior  Debt
Indenture,  according to their tenor,  purport and effect,  to expressly subject
the  Additional  Property  to the  lien  of the  Indenture,  and to  secure  the
performance and observance of all the covenants and conditions  contained in the
Senior  Notes and in the Senior  Debt  Indenture,  and to declare  the terms and
conditions  upon and subject to which the Bonds of Series X are to be issued and
secured,  and for the purpose of confirming the lien of the Original  Indenture,
as heretofore  supplemented  and modified,  and for and in  consideration of the
premises  and of the mutual  covenants  contained  in the  Indenture  and of the
acceptance of the Bonds of Series X by the holders thereof, and of the sum of $1
to the  Company  paid by the  Trustee at or before the  execution  and  delivery
hereof,  and for other valuable  considerations,  the receipt  whereof is hereby
acknowledged,   the  Company  has  executed  and  delivered  this   Twenty-Sixth
Supplemental Indenture, and by these presents does grant, bargain, sell, convey,
assign, transfer,  mortgage, pledge, hypothecate,  set over and confirm unto the
Trustee, the following property, rights, privileges and franchises, to wit:

                                    CLAUSE I.

         All the  property,  real,  personal or mixed,  tangible  or  intangible
(other than that  Excepted  Property as defined in the  Granting  Clauses of the
Original Indenture) of every kind,  character and description which is described
in Article Five hereof.

                                   CLAUSE II.

         Without  in any  way  limiting  anything  in  Article  Five  hereof  or
hereinafter described,  all and singular the lands, real estate,  chattels real,
interests in lands,  leaseholds,  ways,  rights-of-way,  easements,  servitudes,
permits  and  licenses,   lands  under  water,   riparian  rights,   franchises,
privileges,  gas or electric generating plants,  natural gas plants, gas storage
plants and facilities,  gas or electric  transmission and distribution  systems,
gas  gathering   systems  and  tap  lines,   and  all  apparatus  and  equipment
appertaining  thereto,  offices,  buildings,  warehouses  and other  structures,
machine  shops,  tools,  materials  and  supplies and all property of any nature
appertaining  to any of the  plants,  systems,  business  or  operations  of the
Company,  whether or not affixed to the realty,  used in the operation of any of
the premises or plants or systems or otherwise, which are now owned or which may
hereafter be owned or acquired by the Company,  other than Excepted  Property as
defined in the Granting Clauses of the Original Indenture.

                                   CLAUSE III.

         All corporate,  Federal, state, municipal and other permits,  consents,
licenses,  bridge licenses,  bridge rights, river permits,  franchises,  grants,
privileges  and  immunities of every kind and  description,  now belonging to or
which  may  hereafter  be owned,  held,  possessed  or  enjoyed  by the  Company
(including  those  described  in Article  Five  hereof  and other than  Excepted
Property as defined in the Granting  Clauses of the Original  Indenture) and all
renewals, extensions, enlargements and modifications of any of them.

                                   CLAUSE IV.

         Also  all  other  property,   real,  personal  or  mixed,  tangible  or
intangible  (other than Excepted  Property as defined in the Granting Clauses of
the Original Indenture) of every kind, character and description and wheresoever
situated,  whether or not  useful in the  generation,  manufacture,  production,
transportation,  distribution or sale of gas or electricity,  now owned or which
may hereafter be acquired by the Company, it being the intention hereof that all
property,  rights and  franchises  acquired by the Company after the date hereof
(other than Excepted Property as defined in the Granting Clauses of the Original
Indenture) shall be as fully embraced within and subjected to the lien hereof as
if such property were now owned by the Company and were  specifically  described
herein and conveyed hereby.

                                    CLAUSE V.

         Together  with all and  singular the plants,  buildings,  improvements,
additions, tenements, hereditaments, easements, rights, privileges, licenses and
franchises  and all  other  appurtenances  whatsoever  belonging  or in  anywise
appertaining to any of the property hereby mortgaged or pledged,  or intended so
to be, or any part  thereof,  and the reversion  and  reversions,  remainder and
remainders,  and the rents, revenues,  issues,  earnings,  income,  products and
profits  thereof,  and of every part and  parcel  thereof,  and all the  estate,
right, title, interest, property, claim and demand of every nature whatsoever of
the  Company  at law,  in  equity  or  otherwise  howsoever,  in, of and to such
property and every part and parcel thereof.

                                   CLAUSE VI.

         Also any and all property, real, personal, or mixed (including Excepted
Property as defined in the  Granting  Clauses of the Original  Indenture),  that
may, from time to time hereafter, by delivery or by writing of any kind, for the
purpose  hereof be in  anywise  subjected  to the lien  hereof  or be  expressly
conveyed,  mortgaged,  assigned,  transferred,  deposited  and/or pledged by the
Company or by anyone in its behalf or with its consent, to and with the Trustee,
which is hereby  authorized  to receive the same at any and all times as and for
additional  security  and  also,  when  and as in  the  Indenture  provided,  as
substituted security hereunder, to the extent permitted by law. Such conveyance,
mortgage, assignment,  transfer, deposit and/or pledge or other creation of lien
by the  Company  or by anyone in its  behalf or with its  consent of or upon any
property as and for additional security may be made subject to any reservations,
limitations, conditions and provisions which shall be set forth in an instrument
or  agreement  in writing  executed by the Company or the person or  corporation
conveying, assigning, mortgaging,  transferring,  depositing and/or pledging the
same and/or by the Trustee,  respecting the use,  management and  disposition of
the property so conveyed,  assigned,  mortgaged,  transferred,  deposited and/or
pledged, or the proceeds thereof.

                                EXCEPTED PROPERTY

         There is,  however,  expressly  excepted and excluded from the lien and
operation of the Indenture all property  specifically excepted under the heading
"Excepted  Property" of the Granting  Clauses of the Original  Indenture and all
property released or otherwise disposed of pursuant to the provisions of Article
Seven of the Original Indenture.

         The Company may, however, pursuant to the provisions of Granting Clause
VI above, subject to the lien and operation of the Indenture, all or any part of
the  Excepted  Property  as defined  in the  Granting  Clauses  of the  Original
Indenture.

         TO HAVE AND TO HOLD the Trust  Estate  (as  defined in  Paragraph  A of
Section  1.06  of the  Original  Indenture)  and  all and  singular  the  lands,
properties,  estates,  rights,  franchises,  privileges and appurtenances hereby
mortgaged,  conveyed,  pledged or assigned,  or intended so to be, together with
all the appurtenances thereto appertaining,  unto the Trustee and its successors
and assigns, forever:

         SUBJECT,  HOWEVER, to Permitted  Encumbrances as defined in Paragraph G
of Section  1.07 of the  Original  Indenture,  and with  respect to any property
which the Company may  hereafter  acquire,  all terms,  conditions,  agreements,
covenants,  exceptions  and  reservations  expressed or provided in the deeds or
other instruments,  respectively, under and by virtue of which the Company shall
hereafter acquire the same and to any liens thereon  existing,  and to any liens
for unpaid  portions of the purchase money placed  thereon,  at the time of such
acquisitions;

         BUT IN  TRUST,  NEVERTHELESS,  for the  equal  and  proportionate  use,
benefit,  security and  protection of those who from time to time shall hold the
Bonds and coupons  authenticated  and  delivered  under the  Indenture  and duly
issued by the Company, without any discrimination, preference or priority of any
one Bond or coupon  over any other by reason of  priority  in the time of issue,
sale or negotiation thereof or otherwise, except as provided in Section 10.02 of
the Original  Indenture,  so that, subject to said Section 10.02 of the Original
Indenture,  each and all of said Bonds and  coupons  shall have the same  right,
lien and privilege under the Original Indenture,  as heretofore supplemented and
as  supplemented  by this  Twenty-Sixth  Supplemental  Indenture,  and  shall be
equally  secured  thereby  and  hereby  and  shall  have the same  proportionate
interest  and share in the Trust  Estate,  with the same effect as if all of the
Bonds and coupons had been issued,  sold and negotiated  simultaneously;  and in
trust for enforcing payment of the principal of the Bonds and of the premium, if
any, and  interest  thereon,  according to the tenor,  purport and effect of the
Bonds and coupons and of the Indenture, and for enforcing the terms, provisions,
covenants and stipulations in the Indenture and in the Bonds set forth;

         UPON  CONDITION  that,  until the  happening of an Event of Default (as
defined  in Section  14.01 of the  Original  Indenture),  the  Company  shall be
suffered and permitted to possess, use and enjoy the Trust Estate, except money,
securities and other personal  property pledged or deposited with or required to
be pledged or deposited with the Trustee under the Indenture, and to receive and
use  the  rents,  revenues,  issues,  earnings,  income,  products  and  profits
therefrom:

                                   ARTICLE ONE

            BONDS OF SERIES X AND CERTAIN PROVISIONS RELATING THERETO

         SECTION  1.01.  Terms of Bonds of Series X. There  shall be, and hereby
is, created a new series of Bonds,  known as and entitled "First Mortgage Bonds,
Series X, due 2009"  (herein  referred to as the "Bonds of Series  X"),  and the
form thereof shall be  substantially  as  hereinafter  set forth in Section 1.02
hereof.  The  principal  amount of the  Bonds of  Series X shall not be  limited
except as  provided in Section  2.01 of the  Original  Indenture  (as amended by
Section 1.01 of the Thirteenth  Supplemental Indenture dated as of July 1, 1974)
and  except  as may be  provided  in any  indenture  supplemental  thereto.  The
definitive  Bonds of Series X shall be issued only as  registered  Bonds without
coupons  of the  denomination  of $1,000 or any  multiple  thereof,  and of such
respective  amounts  of each of said  denominations  as may be  executed  by the
Company and delivered to the Trustee for authentication and delivery.

         The Bonds of  Series X shall be  registered  in the name of the  Senior
Debt Trustee or to any successor trustee under the Senior Debt Indenture for the
benefit of the holders of the Senior Notes.

         The Bonds of Series X are to be issued to the  Senior  Debt  Trustee to
secure the payment when due of all  obligations  of the Company under the Senior
Notes.

         The Bonds of Series X are to be dated as of January 12, 1999, are to be
issued in the aggregate  principal  amount of $175,000,000  and are to mature on
January 15,  2009.  The  principal  of the Bonds of Series X shall be payable in
whole or in installments on such date or dates as the Company has any obligation
to make any principal  payment  under the Senior Notes,  but not later than [the
maturity  date of the  Senior  Notes].  The Bonds of Series X will have the same
stated rates of interest (and  interest  shall be calculated in the same manner)
and "interest payment dates" (herein so called) as the Senior Notes.

         Any  payment  made in respect to the  Company's  obligations  under the
Senior  Notes  shall be deemed a payment  in respect  of the  Company's  related
obligations  under the Bonds of Series X. The  obligation of the Company to make
payments with respect to the principal of, premium,  if any, and interest on the
Bonds of Series X shall be fully satisfied and discharged to the extent that, at
any time that any such payment  shall be due, the Company  shall have paid fully
the then due  principal  of,  premium,  if any,  and  interest on, and fees with
respect to, the Senior Notes. Until such time as the Trustee shall have received
notice from the Senior Debt Trustee  that an "Event of Default"  under the First
Supplemental  Indenture  has occurred and is  continuing,  the Trustee  shall be
entitled to assume that all such payments have been made.  Any such notice shall
provide the Trustee with information on the principal and interest  payments due
thereafter on the Bonds of Series X. Any payments of the principal of,  premium,
if any, and the interest on the Bonds of Series X shall be payable, in such coin
or currency of the United  States of America as at the time of payment  shall be
legal  tender for the  payment of public and  private  debts,  at the  principal
office of the Trustee in the City of  Chicago,  State of  Illinois.  Interest on
Bonds of Series X shall be  payable  in each case to the holder of record on the
record date as set forth below.

         On the Release Date,  the Bonds of Series X shall be surrendered to the
Company  pursuant  to the  terms of the  First  Supplemental  Indenture  and the
Company's  obligations under the Bonds of Series X from the Release Date forward
shall be discharged and deemed satisfied.

         The  definitive  Bonds of  Series X may be  issued in the form of Bonds
engraved,  printed,  lithographed  on steel engraved  borders or typed on safety
paper.

         The  person  in whose  name any Bond of Series X is  registered  at the
close of business on any record date (as  hereinbelow  defined)  with respect to
any interest  payment date shall be entitled to receive the interest  payable on
such interest  payment date  notwithstanding  the  cancellation  of such Bond of
Series X upon any transfer or exchange thereof  (including any exchange effected
as an incident to a partial  redemption  thereof)  subsequent to the record date
and prior to such interest payment date,  except that, if and to the extent that
the Company defaults in the payment of the interest due on such interest payment
date, then the registered holders of Bonds of Series X on such record date shall
have no further right to or claim in respect of such defaulted  interest as such
registered  holders on such record  date,  and the  persons  entitled to receive
payment of any  defaulted  interest  thereafter  payable or paid on any Bonds of
Series X shall be the registered holders of such Bonds of Series X on the record
date for payment of such defaulted  interest.  The term "record date" as used in
this Section 1.01, and in the form of the Bonds of Series X, with respect to any
interest  payment date  applicable to the Bonds of Series X, shall mean the date
fifteen days prior to such interest payment date (or the preceding  business day
if a holiday or other day on which the office of the Trustee is closed), or such
record date established for defaulted interest as hereinafter provided.

         Subject to the  provisions  of Section 2.11 of the Original  Indenture,
all definitive  Bonds of Series X, upon surrender at the principal office of the
Trustee,  shall be  exchangeable  for  other  Bonds of  Series X of a  different
denomination or denominations, as requested by the holder surrendering the same.
The Company shall execute, and the Trustee shall authenticate and deliver, Bonds
of Series X whenever the same shall be required for any such exchange.

         Notwithstanding   the  provisions  of  Section  2.11  of  the  Original
Indenture,  no charge  shall be made for any  exchange  of Bonds of Series X for
other  Bonds  of  Series  X of  different  authorized  denominations  or for any
transfer of Bonds of Series X, except that the Company at its option may require
the  payment  of a sum  sufficient  to  reimburse  it for any stamp tax or other
governmental charge incident thereto.

         The Bonds of Series X shall be  redeemed by the Company in whole at any
time prior to maturity at a redemption  price of 100% of the principal amount to
be redeemed,  plus any accrued and unpaid  interest to the redemption  date, but
only if the Trustee shall receive a written  demand from the Senior Debt Trustee
for redemption of all Bonds of Series X held by the Senior Debt Trustee  stating
that an "Event of Default" under the First  Supplemental  Indenture has occurred
and is continuing and that payment of the principal amount outstanding under the
Senior Notes, all interest thereon and all other amounts payable  thereunder are
immediately due and payable and demanding  payment thereof;  provided,  however,
that the Bonds of Series X shall not be  redeemed in the event that prior to the
date of such  redemption  the Trustee shall have  received a certificate  of the
Senior Debt  Trustee  (a) stating  that there has been a waiver of such Event of
Default,  or (b) withdrawing said written demand. The redemption of the Bonds of
Series X shall be made forthwith upon receipt of such demand by the Company from
the  Senior  Debt  Trustee on behalf of the  holders of the Senior  Notes or the
Trustee.

         The Trustee  hereunder  shall, by virtue of its office as such Trustee,
be a paying agent of the Company for the purpose of the payment of the principal
of and premium,  if any, and interest on the Bonds of Series X and the registrar
and  transfer  agent  of  the  Company  for  the  purpose  of  registering   and
transferring  Bonds of Series X.  Neither the  Company nor the Trustee  shall be
required to make transfers or exchanges of Bonds of Series X for a period of ten
days next  preceding the mailing of notice of redemption of Bonds of Series X to
be redeemed  and  neither the Company nor the Trustee  shall be required to make
transfers  or  exchanges  of any  Bonds of  Series  X  designated  in whole  for
redemption  or that  part  of any  Bond  of  Series  X  designated  in part  for
redemption.

         SECTION 1.02. Form of Bonds of Series X. The Bonds of Series X shall be
in substantially the following form:

      THIS BOND IS NOT TRANSFERABLE EXCEPT TO A SUCCESSOR TRUSTEE UNDER THE
       INDENTURE DATED JANUARY 1, 1999, AS SUPPLEMENTED, BETWEEN TEXAS-NEW
           MEXICO POWER COMPANY AND CHASE BANK OF TEXAS, N.A., TRUSTEE


                           [FORM OF BOND OF Series X]

No. X                                                       $[                ]

                         TEXAS-NEW MEXICO POWER COMPANY
                     First Mortgage Bond, Series X, Due 2009


         Texas-New Mexico Power Company, a Texas corporation (hereinafter called
the  "Company"),  for value  received,  hereby  promises to pay to Chase Bank of
Texas,  N.A. as Senior Debt Trustee (as  hereinafter  defined)  under the Senior
Debt Indenture (as hereinafter  defined),  or to any successor Trustee under the
Senior Debt Indenture, Million Dollars ($ ) or such lesser amount as is equal to
the aggregate  principal  amount of the outstanding  Senior Notes (as defined in
the  First  Supplemental   Indenture   hereinafter  defined),  in  whole  or  in
installments  on such date or dates as the  Company has any  obligation  to make
payments under the First Supplemental Indenture, but not later than the Maturity
Date (as defined in the First  Supplemental  Indenture),  and to pay interest on
the unpaid  principal  amount hereof to the registered owner hereof at such rate
per annum on each interest payment date (as hereinafter defined) and at maturity
as shall cause the amount of interest  payable on such interest payment date (as
hereinafter  defined)  on this Bond to equal the  amount  of  interest  and fees
payable on such interest  payment date (as hereinafter  defined) under the First
Supplemental Indenture as provided below.

         The  principal  of,  premium,  if any,  and  interest  on this Bond are
payable at the principal  corporate trust office mentioned on the reverse hereof
of U.S. Bank Trust National  Association  (the  "Trustee"),  or its successor in
trust under the  Indenture  (as  hereinafter  defined),  in the City of Chicago,
Illinois,  in such coin or  currency  of the United  States of America as at the
time of  payment  shall be legal  tender for the  payment of public and  private
debts.

         The Bonds of Series X have been  issued to the Senior  Debt  Trustee in
connection with the issuance of the Senior Notes, to secure the payment when due
of all  obligations  of the  Company  under the  Senior  Notes  issued  under an
indenture  supplemental  (the "First  Supplemental  Indenture")  to the Original
Senior Debt Indenture (hereinafter defined) with the Senior Debt Trustee for the
purpose of issuing a series of  securities in an aggregate  principal  amount of
$175,000,000  to be  designated  the "6 1/4% Senior Notes Due 2009" (the "Senior
Notes").  The Company has  executed and  delivered to Chase Bank of Texas,  N.A.
(the  "Senior  Debt  Trustee")  an  indenture  dated as of  January 1, 1999 (the
"Original  Senior  Debt  Indenture"  and  together  with the First  Supplemental
Indenture, the "Senior Debt Indenture") to provide for the issuance from time to
time of its debentures, notes, bonds or other evidences of indebtedness.

         The interest on this Bond shall be payable on the same dates (each,  an
"interest  payment  date") as interest is payable from time to time  pursuant to
the Senior Notes until  maturity of this Bond,  or until the  occurrence  of the
Release  Date,  or, if the Company  defaults in the payment of principal  due on
this Bond,  until such  principal and interest  shall have been paid in full and
the Company's  obligations  with respect  thereto  discharged as provided in the
Indenture (as hereinafter defined).  The amount of interest payable from time to
time under the Senior  Notes,  the basis on which such  interest is computed and
the  dates on  which  such  interest  is  payable  are set  forth  in the  First
Supplemental Indenture.

         Any payment of the principal of, premium,  if any, and interest made in
respect of the  Company's  obligations  under the Senior Notes shall be deemed a
payment in respect of the  respective  obligations  under the Bonds of Series X.
The obligation of the Company to make payments with respect to the principal of,
premium,  if any, and interest on the Bonds of Series X shall be fully satisfied
and  discharged  to the extent that,  at any time that any such payment shall be
due, the Company shall have paid fully the then due principal  of,  premium,  if
any, and interest on, the Senior Notes.

         On the Release Date (as defined in the First  Supplemental  Indenture),
and subject to the terms and  conditions  of the First  Supplemental  Indenture,
this Bond shall be  surrendered  to the  Company and the  Company's  obligations
hereunder  from  the  Release  Date  forward  shall  be  discharged  and  deemed
satisfied.
         This Bond shall not become or be valid or  obligatory  for any  purpose
until the  certificate  of  authentication  hereon shall have been signed by the
Trustee.

         The  provisions  of this Bond are  continued on the reverse  hereof and
such continued  provisions shall for all purposes have the same effect as though
fully set forth at this place.

         IN WITNESS WHEREOF, TEXAS-NEW MEXICO POWER COMPANY has caused this Bond
to be executed in its corporate name by the manual or facsimile signature of its
President or one of its Vice  Presidents  and its corporate seal to be impressed
or  imprinted  hereon,  attested  by the manual or  facsimile  signature  of its
Secretary or one of its Assistant Secretaries, and this Bond to be dated.

                                           TEXAS-NEW MEXICO POWER COMPANY,


                                           By:
                                              President

Attest:


         Secretary

(Seal)



                                    Date of Authentication:------------------

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION


         This  Bond  is one  of  the  Bonds  described  in the  within-mentioned
Indenture.




                           U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee




                                      Authorized Officer



                      [FORM OF REVERSE OF BOND OF SERIES X]

         This Bond is one of an  authorized  issue of Bonds of the Company known
as its "First Mortgage Bonds," limited as provided in the Indenture  hereinafter
mentioned,  issued and to be issued in one or more series under, and all equally
and ratably secured (except as any sinking, amortization,  improvement, renewal,
replacement or other analogous fund established under the Indenture  hereinafter
mentioned,  may  afford  additional  security  for the  Bonds of any  particular
series) by an  Indenture  of Mortgage  and Deed of Trust dated as of November 1,
1944,  executed to City National Bank and Trust Company of Chicago,  as to which
Continental  Illinois  National Bank and Trust  Company of Chicago  (which later
changed its name to Continental Bank, National Association,  then to Continental
Bank, a banking  corporation  organized under the laws of Illinois,  and then to
Bank of America  Illinois,  a banking  corporation  organized  under the laws of
Illinois,  who was  succeeded by First Trust of Illinois,  National  Association
which later changed its name to First Trust National  Association,  then to U.S.
Bank  Trust  National  Association),   as  successor  trustee,  as  Trustee,  as
supplemented  by  twenty-five  supplemental  indentures  thereto,  including the
Thirteenth,   Fourteenth,   Fifteenth,   Sixteenth,   Seventeenth,   Eighteenth,
Nineteenth, Twentieth, Twenty-First, Twenty-Second,  Twenty-Third, Twenty-Fourth
and  Twenty-Fifth  Supplemental  Indentures  which also  modified  the  Original
Indenture  and  the  Twenty-Sixth   Supplemental  Indenture  (the  "Twenty-Sixth
Supplemental Indenture") dated as of January 1, 1999 (said Indenture of Mortgage
and Deed of Trust,  as so  supplemented  and  modified,  being herein called the
"Indenture"),  to which Indenture  reference is hereby made for a description of
the properties mortgaged and pledged, the nature and extent of the security, the
rights  of the  holders  of the  Bonds and the  appurtenant  coupons  and of the
Trustee  and of the  Company  in  respect  of such  security,  and the terms and
conditions upon which the Bonds are and are to be secured.

         The  Indenture  contains  provisions  permitting  the  Company  and the
Trustee,  with the consent of the holders of not less than seventy-five per cent
in principal amount of the Bonds  (exclusive of Bonds  disqualified by reason of
the Company's interest therein) at the time outstanding, including, if more than
one series of Bonds  shall be at the time  outstanding,  not less than sixty per
cent in  principal  amount of each  series  affected,  to  execute  supplemental
indentures amending the Indenture;  provided, however, that no such supplemental
indenture  shall  extend the fixed  maturity  of this Bond or reduce the rate or
extend  the time of  payment  of  interest  hereon or reduce  the  amount of the
principal hereof or reduce any premium payable on the redemption hereof, without
the consent of the holder hereof.

         As provided in the  Indenture,  the Bonds are  issuable in Series which
may vary as in the Indenture provided or permitted. This Bond is one of a series
entitled  "First  Mortgage Bonds,  Series X, due 2009"  (hereinafter  called the
"Bonds of Series X").

         Bonds of this  series  may,  upon  surrender  thereof at the  principal
office of the Trustee,  be exchanged  for several Bonds of the same series for a
like aggregate principal amount in authorized  denominations;  and several Bonds
of this series, registered in the same name, may, upon surrender thereof at said
principal  office of the Trustee,  be exchanged  for one Bond of the same series
for a like aggregate  principal  amount in authorized  denominations.  No charge
shall  be made for any  exchange  of Bonds of this  series  for  other  Bonds of
different authorized denominations or for any transfer of this Bond, except that
the  Company at its option  may  require  the  payment  of a sum  sufficient  to
reimburse it for any stamp tax or other governmental charge incidental thereto.
         The Company and the Trustee may deem and treat the person in whose name
this Bond shall be  registered  as the absolute  owner hereof for the purpose of
receiving payment as herein provided and for all other purposes,  whether or not
this Bond shall be overdue;  and all such payments  shall be valid and effectual
to satisfy and discharge  the liability  upon this Bond to the extent of the sum
or sums so paid.

         If an event of default as defined in the  Indenture  shall  occur,  the
principal of all the Bonds of Series X may become or be declared due and payable
upon the  conditions  and in the  manner  and with the  effect  provided  in the
Indenture and the First Supplemental Indenture.

         No  recourse  shall be had for the payment of the  principal  of or the
interest  on this Bond or for any claim  based  hereon or  otherwise  in respect
hereof or based on or in respect of the  Indenture,  against  any  incorporator,
stockholder,  officer or  director,  as such,  past,  present or future,  of the
Company or of any predecessor or successor corporation, whether by virtue of any
constitution,  statute or rule of law or by the enforcement of any assessment or
penalty, or otherwise,  all such liability being by the acceptance hereof and as
part of the consideration for the issue hereof expressly waived and released, as
provided in the  Indenture;  provided,  however,  that nothing  herein or in the
Indenture contained shall be taken to prevent recourse to and the enforcement of
the liability,  if any, of any  shareholder or any  stockholder or subscriber to
capital stock upon or in respect of shares of capital stock not fully paid.

         This Bond is nontransferable except to effect transfer to any successor
to the  Senior  Debt  Trustee  under the First  Supplemental  Indenture,  but is
exchangeable  by the  registered  holder  hereof,  in person or by attorney duly
authorized,  at the corporate  trust office of the Trustee,  any such  permitted
transfer or exchange to be made in the manner and upon the conditions prescribed
in the  Indenture,  upon the  surrender  and  cancellation  of this Bond and the
payment of any  applicable  taxes and fees  required  by law,  and upon any such
transfer  or  exchange  a new  registered  bond or bonds or the same  series and
tenor, will be issued to the authorized transferee, or the registered holder, as
the case may be.

         Upon notice being given of the  redemption of all or part of the Senior
Notes in  accordance  with the  Senior  Debt  Indenture  and such  Senior  Notes
becoming  due and  payable in  accordance  with such notice of  redemption,  the
Company  shall  redeem,  on the  redemption  date  specified  in such  notice  a
principal  amount of Bonds of Series X equal to the  principal  amount of Senior
Notes to be redeemed,  at a redemption  price equal to the  principal  amount of
such  Bonds of Series X to be  redeemed,  plus a premium,  if any,  equal to the
premium  payable on the  redemption of such Senior  Notes,  if any, plus accrued
interest to such redemption date.

         Upon payment by the Company of principal, premium, if any, and interest
in  satisfaction  of amounts due and payable in  accordance  with such notice of
redemption of all or part of the Senior Notes, as the case may be, the Company's
obligations  to make  payment  with  respect to the amounts due and payable with
respect to the  principal  amount of Bonds of Series X to be  redeemed  shall be
satisfied.

         The Company covenants that, prior to the Release Date, it will not take
any action that would  cause the  outstanding  principal  amount of the Bonds of
Series X to be less than the then  outstanding  principal  amount of the  Senior
Notes.

                                   ARTICLE TWO

                           AMOUNT OF BONDS OUTSTANDING

         The aggregate  principal amount of Bonds of the Company outstanding and
presently to be issued and  outstanding  under the provisions of, and secured by
the Indenture,  will be $275,000,000 consisting of $100,000,000 principal amount
of First Mortgage  Bonds,  Series U, 9 1/4% due 2000, due September 15, 2000 and
$175,000,000  principal amount of First Mortgage Bonds,  Series X, due 2009, due
January  15,  2009,  to be  issued  pursuant  to  Article  Four of the  Original
Indenture as provided for in this Twenty-Sixth Supplemental Indenture.

         Additional  Bonds of Series U and X and of  subsequent  series  created
after the execution and delivery of this  Twenty-Sixth  Supplemental  Indenture,
may, from time to time, be  authenticated,  delivered and issued pursuant to the
terms of the Indenture.

                                  ARTICLE THREE

                         ADDITIONAL COVENANTS OF COMPANY

         The Company  covenants and agrees with the Trustee,  for the benefit of
the  Trustee  and all the  present  and future  holders  of the Bonds,  that the
Company will pay the  principal of,  premium,  if any, and interest on all Bonds
issued or to be issued and secured by the Indenture,  as well as all Bonds which
may be hereafter issued in exchange or substitution  therefor,  and will perform
and  fulfill  all  of the  terms,  covenants  and  conditions  of  the  Original
Indenture,  with  respect  to  the  additional  Bonds  to be  issued  under  the
Indenture.

                                  ARTICLE FOUR

                                  MISCELLANEOUS

         This  instrument  is executed  and shall be  construed  as an indenture
supplemental to the Original Indenture as heretofore supplemented and shall form
a part thereof, and the Original Indenture as heretofore  supplemented is hereby
confirmed.

         The recitals in this  Twenty-Sixth  Supplemental  Indenture are made by
the Company only and not by the Trustee;  and all of the provisions contained in
the Original Indenture in respect of the rights, privileges,  immunities, powers
and duties of the Trustee  shall be  applicable  in respect  hereof as fully and
with like effect as if set forth herein in full.

         Although  this  Twenty-Sixth   Supplemental   Indenture  is  dated  for
convenience  and for the purpose of reference as of January 1, 1999,  the actual
date or dates  of  execution  thereof  by the  Company  and the  Trustee  are as
indicated by their respective acknowledgments hereto annexed.

         In order to  facilitate  the  recording or filing of this  Twenty-Sixth
Supplemental  Indenture,  the same may be  simultaneously  executed  in  several
counterparts,  each of  which  shall  be  deemed  to be an  original,  and  such
counterparts shall together constitute but one and the same instrument.

                                  ARTICLE FIVE

                                      FIRST

                                      Land

         The following  described lots,  pieces,  or parcels of land acquired by
the Company since the execution  and delivery of the  Twenty-Fifth  Supplemental
Indenture  dated as of September 10, 1996,  are located in the States and in the
Counties designated and hereinafter set forth:

STATE OF TEXAS

         Coryell County

         All that  piece or  parcel  of land,  situate,  lying  and being in the
County of Coryell,  State of Texas,  and  described  as  follows:  Out of the C.
Cazenobe Survey in the town of Gatesville,  Coryell County, Texas, and being all
of Lot No. 6, and parts of Lots Nos.  2, 3, 9 and 10 in Block No. 9, as shown by
the plat of the town of  Gatesville,  Texas,  adopted  May 1, 1925,  and further
described as follows:



         BEGINNING  at a point 154 feet E of the S W corner of said Block No. 9,
         of said  town of  Gatesville,  Texas,  in the  North  line of  Saunders
         Street,  at the S W corner  of Lot No. 7, in said  Block No. 9,  --said
         beginning point being further identified as being at the South or outer
         edge of the Concrete curb;  Thence North with the West line of Lot. No.
         7 in Block  No.  9, of the Town of  Gatesville,  Texas,  and the  fence
         between this property and the property on the east  thereof,  now owned
         by A. H. Meadows,  a distance of 100 feet for a corner of this;  Thence
         West and parallel to the North line of Saunders  Street,  a distance of
         50 feet for a corner of this;  Thence South and parallel  with the East
         line  hereof,  a distance of 100 feet to the South or outer edge of the
         Concrete  Curb on the North line of  Saunders  Street;  Thence with the
         south or outer  edge of the said  concrete  curb and the North  line of
         Saunders Street, East 50 feet to the place of beginning.



                                     FOURTH

                                   Franchises

         All and singular,  the corporate,  federal,  state, municipal and other
franchises,  permits, consents,  licenses,  grants, immunities,  privileges, and
rights  owned by the Company  and now held by the Company for the  construction,
maintenance,  and  operation  of  electric  light,  heat,  and power  plants and
systems; for the construction,  maintenance; as well as all franchises,  grants,
immunities,  privileges,  and  rights  of the  Company  used  or  useful  in the
operation  of the Trust  Estate,  including  all and  singular  the  franchises,
grants,  immunities,  privileges,  and  rights  of the  Company  granted  by the
governing  authorities of the cities and towns enumerated in the schedule below,
and by all other  municipalities  or political  subdivisions,  and all renewals,
extensions,  and  modifications  of said  franchises,  grants,  privileges,  and
rights, or any of them, including:

         A.       State of New Mexico

                  None


         B.       State of Texas

                  Municipality                   Expiration Date
                  ------------------------------------------------------------
                  Alvin                          Extended to April, 20 1999
                  Hamilton                       Extended to January 10, 2015
                  La Marque                      Extended to July 31, 1999
                  Texas City                     Extended to September 30, 1999


<PAGE>


         IN WITNESS  WHEREOF,  TEXAS-NEW  MEXICO  POWER  COMPANY has caused this
Twenty-Sixth  Supplemental  Indenture to be signed in its corporate  name by its
President or a Vice President and its corporate seal to be hereunto  affixed and
attested  by its  Secretary  or an  Assistant  Secretary,  and,  in token of its
acceptance of the trust created hereby, U.S. Bank Trust National Association has
caused this  Twenty-Sixth  Supplemental  Indenture to be signed in its corporate
name  by  one  of its  Vice  Presidents  and  attested  by one of its  Assistant
Secretaries, all as of the day and year first above written.

                                            TEXAS-NEW MEXICO POWER COMPANY,



(Corporate Seal)                            By:    /s/ M.S. Cheema
                                                ---------------------------
                                                M. S. Cheema
                                                Senior Vice President

Attest:   

/s/ Paul W. Talbot
----------------------
Paul W. Talbot
Secretary

                                          U.S. BANK TRUST NATIONAL ASSOCIATION,
                                          as Trustee


                                          By:    /s/ Larry Kusch
                                              -----------------------------
                                              Assistant Vice President

Attest:


  /s/ H. H. Hall, Jr.
----------------------
Assistant Secretary



<PAGE>


STATE OF ILLINOIS    )
                     )
COUNTY OF COOK       )


         On this 12th day of January,  1999, before me, S. Rhoden, Notary Public
in and for the County and State aforesaid,  personally  appeared Larry Kusch, to
me personally  known,  and known to me to be the person whose name is subscribed
to the foregoing instrument and known to me to be an Assistant Vice President of
U.S. Bank Trust National Association,  who, being by me duly sworn, did say that
he resides in Chicago,  Illinois;  that he is a Vice President of said U.S. Bank
Trust  National  Association,  and that said  instrument was signed in behalf of
said  association  by authority of its Board of Directors;  and said H. H. Hall,
Jr.,  acknowledged  said  instrument  to be  the  free  act  and  deed  of  said
association,  and  acknowledged  to me that he executed said  instrument for the
purposes and consideration therein expressed and as the act of said association.

         IN WITNESS WHEREOF, I have hereunto set my hand and seal of office this
12th day of January, 1999.



                                                           /s/ S. Rhoden
                                                       --------------------
(NOTARIAL SEAL)




<PAGE>


STATE OF NEW YORK   )
                    )
COUNTY OF NEW YORK  )


         M. S. Cheema, being duly sworn, deposes and says:

         1. That he is Senior Vice President of TEXAS-NEW  MEXICO POWER COMPANY,
a Texas  corporation,  one of the corporations  described in, and which executed
the foregoing instrument,  and is one of the officers who executed the foregoing
instrument in behalf of TEXAS-NEW MEXICO POWER COMPANY.

         2. That TEXAS-NEW MEXICO POWER COMPANY,  one of the corporations  which
executed the aforementioned  instrument,  is a corporation engaged in the States
of Texas and New Mexico in the generation, purchase, transmission,  distribution
and sale of  electricity  to the  public  and,  consequently,  is a  utility  as
described in Section  35.01,  Texas  Business and Commerce  Code,  Revised Civil
Statutes of Texas.


Subscribed and sworn to before me
this 12th day of January, 1999.

                                                         /s/ Marilyn Weinstein
                                                       ------------------------


(NOTARIAL SEAL)